780. Have you had any cases where it has been
difficult to get it out in the open because of the media?
(Clare Short) Yes. Ghana had a big study before the
election and it was not published pre-election. Of course, it
becomes intensely political. You are going to have battles every
step of the way with these things. Powers in the Anti-Corruption
Commission, whether its reports can be published and whether the
prosecutor acts, especially when you are on really big fish, it
becomes intensely political. You have to be absolutely determined
and never give in.

Barbara Follett: More power to your elbow.

Mr Rowe

781. We were interested to read in the English
language newspaper in Vietnam that the party congress this year
had carried out a study of 100,000 officials and had decided that
46 per cent of them were corrupt. They published this so we felt
that progress was being made.
(Clare Short) Old, very statist systems create lots
of opportunities for corruption. China has this problem. Everything
is regulated and you have to get a licence or permission for everything.
At every single point in the chain there is the possibility of
somebody giving someone a bung and they tend to maximise that
kind of corruption. More pluralistic systems with better, more
transparent management, it is more difficult to get that kind
of endless payment corruption.

782. I have said to you before that I worry
a bit that DFID has become a kind of tick box culture.
(Clare Short) Absolutely not.

783. And that, in quite a lot of projects, the
project team when they have had an exhausting day in the field,
have to come back and fill in forms. I wondered to what extent
DFID uses a participatory approach to evaluation. Do you use the
local community to provide you with their own evaluation of your
projects?
(Clare Short) Firstly, you are completely and deeply
wrong because the old systems were much more tick boxy. There
were projects and you had to say, "Is it gender sensitive?
Is it environmentally sensitive?" Another set of hands, tick
and so on. Now, as we go right into the core of government's own
systems, it is a much bigger scale. It is much more ambitious,
but it is much more systemic and you are looking for sustainable
development, not checking that the project is not environmentally
damaging. You are going much further upstream in your ambitions.
What can be achieved is much more upstream. On the contrary, we
are moving away from a tick box structure. Quite stringent systems
were endlessly checking whether their project would offend against
any of the principles. I think that is a waste of time and precious
staff.

784. These brown reports that we used to get?
(Clare Short) Evaluation is post hoc. It is
not every single project but out of whatever number it is there
will be a post hoc evaluation. We have our own evaluation
department and we employ a lot of academics to do this kind of
work. We basically go back as independent people, talking to everyone
who has ever been engaged in a project, finding out what they
thought of it and whether it was successful.

785. That includes the recipients?
(Clare Short) Absolutely, or the stakeholders. That
is after the event. We are entirely participatory. The other big
thing we have gone strongly for is these participatory poverty
assessments because you cannot always capture what you need to
know by statistics. Uganda had done a lot of reform, focused a
lot of its efforts on the poor and then did a participatory study
where you just ask the poor what is happening and got all sorts
of complaints that shocked it, but made it change the way it focused
its money and they have put a participatory feedback mechanism
into the Ministry of Finance. We have funded a lot of those kind
of studies as well. There is no substitute for asking the people
concerned and having enough respect for them to listen to what
they are saying, because they can teach you an enormous amount
about what is working and what is not working. People come flying
in on aeroplanes and they are so important and they are sorry
for the poor and they do things to them and for them and never
ask them what they thought. Actually, they are quite wise people
and they know a lot. If you ask them what they think and what
happened, they can tell you an awful lot about what works.

786. Can you see any chance of that happening
in Maidstone or Drumchappel?
(Clare Short) There are lessons to be learned from
the best of development work in countries like ours.

Mr Rowe: Try applying it with my local
authorities.

Chairman: We have a lot to improve ourselves,
but not today.

Mr Worthington

787. Can we try and get a bit further in terms
of how you design programmes that are corruption free? We have
all seen situations where you go to the local market and see stuff
that is marked "Aid" and drugs sold in markets and so
on.
(Clare Short) I have not, but I have heard about it.
North Korea, I believe.

788. Then you have the other kind of situation
like some of the European Union programmes which are so scared
about corruption no money ever gets through. It is all done in
Brussels. You have talked about publicity, saying that this is
funded in this way and this is the amount of money. I personally
think broadcasting should be used more often than it is where
people are illiterate but can you say some more about how you
have made programmes corruption free because amazing things happen
where states have rogue schools or phantom schools and people
do not know that there is supposed to be a school there and someone
has been paid for it and so on. Has there been any further thought
about how you make programmes transparent and open rather than
just what you have mentioned so far?
(Clare Short) The Department used to run very high
quality projects with all their own financial and accounting systems
to make sure that there was not corruption. We have very tight
systems and we were very good at it, but that led to no improvements
in the systems of the countries in which we were working. It delivered
good quality interventions where that intervention was at work.
You are absolutely right. You might be running some schools in
a region in a country and getting some better quality, but if
you look at the whole of the education spending of the country
and the number of teachers that are supposedly employed in virtually
all developing countries there are loads of ghost teachers. Somebody
is pocketing the money somewhere. There are other teachers who
never go to the schools. With very highly centralised systems
you get a real problem because someone is running the system at
the centre, but no one at the local level knows what they are
entitled to. If you want to get to scale and stay in with interventions,
you have to get right into the ministry, the whole of its financial
management, how it employs its teachers and so on but decentralise
them. We advocate decentralisation because you get consultation
with poor people and their opinions about what is important to
them. Also, provided you do it transparently, the local people
know what money they are entitled to and if the teacher does not
come to school they will make a fuss or if the teacher is always
drunk etc., which you do get. When you move from highly centralised
systems in weak states with poor administrative capacity, to decentralise
you sometimes get an upsurge of corruption because you have even
weaker systems at local level. For example, when Uganda decentralised,
immunisation rates dropped. You have to help the frail local government
systems train bookkeepers, but this is building a state that will
sustain itself. You see the scale and ambition of what you have
to do to really crack the problem. I am glad we are working on
these ambitions, because the old lovely projects did not build
good, sustainable systems.

789. I take that point. I think it is the number
one problem which we have seen over the last couple of years or
so of how you build those systems. The other problem is where
you have a state that is determined to be corrupt, where the problem
is that all kinds of sanctions or warnings have been given about
perhaps the withdrawal of aid if the state does not mend its ways.
Have you had any further thoughts about how that might be tackled,
about the action by the international community as a whole to
make it more effective?
(Clare Short) We all need to deepen our thinking about
this. It is almost a knee jerking policy frequently that if you
get a bad, oppressive state, people say cut off the aid. If you
have a state that is misgoverning its people, abusing its poor,
what is the remedy to show that we are angry with the state? Take
away a resource that is there to try and improve the life of the
poor. I have challenged that a lot. After the nuclear tests thing
in India, everyone said, "Cut off aid." I said that
it was not the poor of India that organised the nuclear tests.
It is the easy option. We have to be careful. I know that we cannot
put resources into corrupt states that simply misuse them. In
the case of Nigeria and Abacha, most countries left; Britain did
not and we stayed in at local government level where we could
find bits of the system that you could still prop up and keep
working, which means you bring some relief to people who are having
a horrendous time and you are keeping a foot in the country as
an ally of those forces who feel the strength of the challenge.
I have a worryand this is just personalthat we are
all too far back in Burma. Because things are so awful and everyone
has pulled back and back and back, our knowledge of where the
forces of resistance or change might be is very far back and this
becomes a very complicated question. How do you work in very bad
states? States do not fit neatly into the variable levels in between.
We are doing some work in the Department, trying to develop our
thinking. You can go with NGOs to deliver services; that is fairly
easy, but that is very marginal when the vast bulk of the resources
of a country are being misused and you cannot reach everyone in
that way. You can look for ways of building voices of civil society
that might bring about change. For example, if I take Bangladesh
where there are lots of poor people, the recommendation on our
financial commitment to the country was not to increase it so
much because of problems of corruption but I was saying, "Is
this right? There are so many poor people in Bangladesh."
Are there ways in which you could say educating a generation of
children is such a profoundly historically changing thing, is
there any way to stay in a country imperfectly, to promote education
because it might take 10 or 15 years to have these effects but
it will bring change. I think we need to mature this debate.

790. If we take Cambodia, for example, I fully
support your sector wide approach but I wonder whether there are
countries where it is premature to have a sector wide approach,
where the government is not strong enough. In Cambodia, what was
very striking to me was that the key thing was agricultural development,
to get the land being farmed sensibly. I could not see anything
coming out of the Government that was going to do that but I could
see some good NGOs going in there and providing catalysts. If
you put it into the government, you might have problems about
whether the resources would effectively get to the people, but
if you did the NGO approach it might be more effective and cause
change more rapidly.
(Clare Short) That is the easy answer. In a country
where you cannot work with government systems because they are
corrupt or do not care about people or are not focused on the
needs of the poor, you can find some NGOs and that is better than
nothing but it is not systemic change and it is not scale. When
I went to Mozambique, Zambezia Province, where we are working,
we funded a big NGO to do a rural development. It was doing goats.
There was a war in that part of the country. There were no animals.
You give people two goats, they have young and you have a system
of distributing animals. We went to a village and we all drove
up in hundreds of Land Rovers, all funded by the aid budget. They
were doing good work and there were the local Mozambicans from
the rural extension office. They did not have a bicycle. I felt
deeply ashamed. It was wrong in terms of who you were respecting
and also in terms of, when that project ends, it will all go away
but those people are still going to be there. Even in a country
where you have bad central government, yes, of course have a little
pilot, but you are always going to be looking at can we get in
here? Can we strengthen systems of people who are already there,
where the government budgets are going. You might have really
bad ministries but you might have one good ministry or a good
local government area. You always have to be looking for those
opportunities and not be satisfied by just a couple of projects,
nice as they might be, but they are not reaching out to the bulk
of the people. It is very difficult.

791. That is one kind of country but Kenya is
another kind of country where, for years and years, people have
been saying, "This Government is corrupt and is not using
international development money sensibly, wisely or honestly."
What is the way ahead with countries like that?
(Clare Short) In the case of Kenya, there was very
big corruption and the IMF took a very firm position. We did our
Kenya country strategy with a high case and low case scenario.
If a reform effort was put in place, we would grow our programme;
if not, we would carry on with some small stuff that we could
package down and we knew was safe. We then worked with the IMF,
World Bank and all the other development agencies to stand together
with the government to try and get everybody to stand on the same
ground so that the leverage becomes considerable. Kenya did adopt
the change team and a big reform effort which involved strict,
new action in dealing with corruption and management of budgets
and so on. We put up £60 million to help the Civil Service
reform. That programme is teetering a little at the moment and
we are trying to stand with everyone else in the international
community and all the voices of reform in Kenya to keep it alive
because if Kenya falls the poor people of Kenya will get even
poorer. It is very difficult because it becomes intensely political.
One must not play political games. You have to keep your mind
on the fact that your duty is to the poor of Kenya. You are not
entitled to interfere in the politics of another country but you
are entitled to be serious about resources that the British taxpayer
votes are to help the poor. You have a duty to use it for that
objective. You need to be quite careful in the way you handle
this politically. Otherwise, you can end up hectoring countries
in a quite improper, rude and aggressive way and using the aid
budget as a "do what I say" which is not a proper relationship.
On the other hand, it cannot be unconditional either. We are trying
to refine the way we do that and include the Foreign Office more
and more in our representations overseas in that kind of mind
set. They have tended to have a mind set where ODA in the past
did the projects and, if anything, the High Commissioner would
do the hectoring. We need to see this as a shared United Kingdom
effort and have the appropriate kind of sensitivity in the way
in which we present ourselves. We are working at all of that.
With Kenya, we are trying to use whatever influence we have with
the rest of the international community to keep the reform effort
alive in Kenya. It is touch and go at the moment.

Chairman

792. Has aid been resumed or stopped in Kenya,
because at one time the International Monetary Fund said that
unless they set up an anti-corruption bureau they would not lend.
They set it up and now we are told it is unconstitutional.
(Clare Short) It had virtually stopped and the change
team with Richard Leakey and so on and a whole series of international
Kenyans with good records was brought in. I had a programme put
in place. We put our support for the Civil Service reform in place.
There has been all this argument with parliament about the powers
of the Anti-Corruption Authority and we are in great difficulty.
Therefore, the IMF programme is in difficulty and the whole thing
could crumble. Jim Wolfensohn and Hoerst Kohler have just been
as part of their visit to Africa talking to President Moi and
I know the IMF is going to send a team back shortly to try and
track the problem and keep things going.

793. We do not know the outcome yet?
(Clare Short) No. They have not got there yet. Those
talks have been helpful and we have been engaging in talks too
with the reforming elements in Kenya to try and keep the whole
thing alive. There you have some politicians of the past who were
engaged in grand corruption and who are against the reform effort.

Ms King

794. On this point about what do you do when
very poor people are living under very corrupt and ineffective
governments, as far as I am aware, DFID's policy at the moment
is that we look for partners and where we do not find effective
partners we do not sink our aid effort because it would sink without
trace. This has been the single fact that has bothered me most
greatly over the last three or four years, because I do not see
how we avoid penalising people who are already penalised for living
under whether barbaric or simply useless governments. Can you
clarify? Is that DFID's core policy at the moment?
(Clare Short) No. Humanitarian assistance we do anywhere
and everywhere under any kind of government. No people should
go hungry because they have a rotten government. That unconditionally
reaches out. Those are the principles of the international system
and ours to whoever they are, if they are displaced people or
people who cannot eat. Of course, that is not development; that
is just keeping body and soul together. We do not only look for
partners. We also in difficult countries will fund NGOs who do
work. In the forthcoming annual report, our Department spending
on NGO work is, from memory, £198 million. Our contributions
to the World Bank are £172 million and our contributions
to the UN system are something like £150 million.[4]
I think it is shockingI do not know whether it is good
or badthat we are putting more funding through NGOs than
through the World Bank. I am sure our pattern of funding is similar
to most development agencies in the world. That is fairly easy
to do but it is not development. If all you can do is reach out
through UN agencies or NGO activity where it can get in and is
safe, humanitarian relief, then do that, but no one should confuse
themselves that that is development. You keep doing a little to
help people be propped up, waiting for some change to take place
and you may be not doing anything to help bring about the change.
The bit about what else you do is the hard question that we are
trying to elaborate our thinking on.

795. Will part of your thinking be looking at
how you make that transition or how you build in development into
humanitarianwe saw in Burundi very clear examples of how
you would provide humanitarian aid but it virtually backfired
because it was not development aid. You feed the baby until it
reaches a certain weight but then you send it back but because
you cannot sink any wells to get clean water you cannot do that
and the babies come back. It is a continual cycle. In fact
(Clare Short) In the case of Burundi, it is not a
decision about what to do. It is because the country is full of
violence and you cannot do development. People have been killed
from UN agencies. It is not that we are saying we will not do
it; it is impossible to do it. It is the same with the DRC and
in southern Sudan. Mrs Ogata, the former, much respected head
of UNHCR, talked a lot about this and there has been a lot of
thinking about that. We as a Department only integrated; some
parts of the international system cannot but, in the case of Burundi,
it is violence and fighting. President Mandela was there yesterday.
The fighters would not sign the peace agreement and were being
armed by Kabila and that was within the DRC to try and destabilise
Burundi and Rwanda. You have to get peace and some kind of settlement
to do development but even in big countries where there is not
peace if you can opportunistically help some communities and areas
to improve their lives, sort of humanitarian plus, it would do
it, but it gets very difficult, like in southern Sudan, where
the fighters are in theory on the side of the people but they
tend to take from rather than help the people use international
and humanitarian relief. You have to be very careful you are not
helping the fighters. We do not have stringent lines in our head
that say, "We will never move from pure humanitarian to some
developmental aspect until we have got some sort of acceptable,
political leadership at the national level." This paper that
we are working on is trying to address some of these very important
and very difficult questions and I will share it with you wherever
you are.

Mr Robathan

796. Particularly on the issue of corruption,
I understand exactly what you are saying that it can be counterproductive
to hector a government, but when it comes to the misuse of funds,
possibly British taxpayers' funds, where do you draw the line?
Where do you stop trying to encourage a move to a firmer, cajoling
position? You mentioned the violence in Burundi and the former
Kabila government. Where do you draw the line? Where do you start
saying, "I am sorry but this is entirely unacceptable and
if you want our money"?
(Clare Short) We draw the line sharply. I just told
you the story of Kenya. We try to get everyone to stand together
in the reform effort to try and get leverage and commitment. We
were working on electrification in the slums of Dakar with terrible
corruption and we ended the work. It broke the hearts of our engineers
because it was really important to bring light and electrification
to some desperately poor people. We tried every which way. In
terms of budgetary aid, you have to get agreement to tighten and
clean up systems or we will not move, but we use the leverage
because governments often want it and it often gives you leverage
on big systems improvement. We are at the point in Tanzania where
we have been in sector wide programmes, going straight into the
budget, which means you have to have Ministry of Finance tight,
strong systems. We are talking about going a bit further than
sector wide in health or education. The government of Tanzania,
which has weak systems but is trying to move things forward, is
interested and then you can get yourself in a stronger position
to help them tighten up their systems. There is more risk in that
way of working but the gains are massively bigger. We do not ever
move into a corrupt system. We have our own additional safeguards
and we protect the taxpayers' money fantastically tightly because
that is our duty, but we try to use our willingness to go bigger
to get governments to talk to us about the kind of major system
reform that would give them a much better way of preventing corruption
in their country. I assure you we do not throw money around, take
risks or do it in a big, political way.

Chairman

797. I want to explore the implications of the
policy of lending into government programmes which
(Clare Short) We do not lend.

798. If you are not lending, you are investing
in government programmes. You have said that you do not give money
or establish programmes in ministries which are corrupt and which
you cannot support. Does that mean that in that position we do
not and cannot help the poor in that country?
(Clare Short) No. In the case of Ghana before the
elections, we had a very effective, state of the art, sector wide,
collaborating with others health care with the Ministry of Health.
We tried to do the same on primary education and we could not
get it to move, so we went down a level. Instead of working through
the budget to the Ministry, we went down to the regional level
and got books into schools but it was through our intervention.
It is less effective because it will not be sustainable. When
we go away and these books wear out, there will not be others
coming along but we did that because we could not work in the
budgetary system into the Ministry because we could not get the
changes that were needed to do it safely. If we have the ambition
but it does not work, we will pull ourselves back into something
where we are certain that help is being provided. We are getting
books into schools in Ghana and we were getting the kind of sector
wide improvement of the whole management of the school system
programme but if we could not get that we would not carry on putting
money into the Ministry systems.

799. You are prepared to be flexible about the
doctrine of SWAPS in Ghana as you have just illustrated?
(Clare Short) Absolutely, but it is not a doctrine.
It is a way of getting systemic, sustainable change that reaches
scale. It is not just an idea; it is an ambition to bring benefits
to the largest possible number of poor people.